Market Digest: DPZ, GPC, WFC, BLK

Summary

Monday Tee Up: Corporate America Checks In The third-quarter earnings floodgates open this week, despite Monday being a partial holiday (with the bond markets closed). Wall Street will be focused on retail sales data, looking for updates on consumer spending. Last week, the Dow Jones Industrial Average was higher by 1.2%, while the S&P 500 and the Nasdaq both gained 1.1%. For the year, the DJIA is higher by 14%, while the S&P 500 and the Nasdaq have both popped 22%. The earnings calendar this week is packed with big companies from a range of sectors. On Tuesday, Citigroup, Bank of America, Goldman Sachs, Charles Schwab, PNC Financial, State Street, United Airlines, Johnson & Johnson, and United Health all report. On Wednesday, Morgan Stanley, U.S. Bancorp, Discover Financial, and Abbott Labs weight in. On Thursday, it’s Netflix and Travelers, and on Friday, American Express and Procter & Gamble step up to the plate. Earnings grew 13% in the second quarter. We expect 3Q earnings growth of 5%-7%. For full year, we forecast roughly a 7%-9% gain. In the 3Q, we expect Information Technology, Communication Services, and Healthcare to be the sectors that shine. On the economic calendar, Retail Sales will be updated on Thursday, as will Industrial Production and Capacity Utilization. On Friday, Housing Starts and Building Permits will be released. Argus Chief Economist Chris Graja, CFA, is highlighting Retail Sales as the call of the week. Chris expects the September report to show an annual increase of 2.2%. He adds that ‘the report will be a timely health check on consumers ahead of the important holiday season. Employed consumers do their best to make the holidays special for the people they care about. The decline in the September unemployment rate to 4.1% should be a positive catalyst for shopping in November and December.’ Last week, there were mixed signals on inflation. CPI slowed to 2.4% for September, down from 2.5% in August. Core CPI ticked up to 3.3% for September, compared to 3.2% in August. Looking deeper into core inflation data, the widely-watched shelter component is still proving to be sticky, with a rise of 4.9%. The Bureau of Labor Statistics said that this one component accounts for more than 65% of the total 12-month increase. Other categories with sizable increases include motor vehicle insurance, up 16%, and medical care, up 3.3%. Mort

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